Question

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Why do we need to expand formal sources of credit in India?
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Answer 1

Explanation:

We need formal sources of credit in order to reduce the dependence of farmers on informal sources of credit like money lenders.

To reduce the higher risk associated with informal sources of credit because of fluctuating terms and conditions.

To avail cheaper credit to farmers in rural areas.

Answer 2

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Formal sources of credit in India need to be expanded for the development of the nation. Cheap and affordable credit is a necessity for the development of the nation. To make sure that the poor can benefit from the cheaper loans, it is important that the formal credit is distributed more equally.